-- adds additional CEO, broker comment --
The Thali PSC covers an area of 119.2 sq km with water depths ranging from 8 to 48m in the prolific Rio del Rey basin, in the eastern part of the Niger Delta.
Speaking from Cameroon, Graeme Thomson, chief executive, said it was a great deal for Tower.
“Our entry into Cameroon marks a shift in our risk profile from frontier to proven basins and introduces an asset with existing discoveries into the Tower portfolio.
“The more technical work we’ve done on the Block, the more excited we’ve become about the asset.
“We see a great deal of prospectivity there and the potential for further portfolio expansion in Cameroon.”
Commitments under the PSC are for 100 sq km of 3D seismic over the first three years and minimum expenditure of US$13mln, after which there are two further renewal periods of two years at US$15mln apiece.
The PSC was signed in Yaoundé, Cameroon, in the presence of a delegation that included the Minister of Mines, Industry and Technological Development, Emmanuel Bonde.
“We had around 50 dignitaries and media at the signing ceremony signifying the importance of this PSC award to Cameroon,” Thomson added.
The Rio del Rey basin accounts for over 90% of Cameroon’s production with over one billion barrels of oil pumped so far.
Remaining reserves are estimated at 1.2bn boe at depths of less than 2,000 metres.
Seven million barrels of oil have already been discovered on the Thali Block, but are viewed as sub-commercial discoveries.
Tower sees potential to add incremental oil reserves and to develop deeper prospects.
““This is a relatively mature block so the risk profile is substantially lower than some of the other assets in our portfolio.
“That said, our technical work points to a lot of potential exploration upside outside of the more tried and tested plays in the area,” Thomson added.
The initial priority will be the acquisition of 3D seismic in the first half of 2016, with drilling expected to start in 2017/18.
Tower said the existence of infrastructure in adjacent blocks meant a 20mln barrel oil field had the potential to be economically viable at current oil prices.
“The in-place infrastructure in the region means that development of any discoveries should be easier than it would be in a frontier environment,” added Thomson.
Broker GMP Securities reinforced that point, saying the attractiveness of the block is the low threshold requirement.
With around US$9.8m cash as the end July after the equity placing and no drilling commitments in the near-term,
Tower also continues to work on maturing its frontier basin portfolio across Zambia, Namibia, South Africa, Kenya and SADR, the broker added.